Archive for the 'Uncategorized' Category

Economics Music Video Contest: Markets Promote Peace

June 30, 2014

by Edward Stringham

As a professor, I am a  fan of rigorous economic research, but I am also a fan of helping students learn about how important economics is in an engaging way. John Papola did an excellent job with the Keynes Versus Hayek music videos (especially the second one with yours truly), and over the past couple years I have had students make economics music videos. Think it is impossible to have music videos about Supply and Demand or Economic Value is Subjective? Think again! The results of the 2012 Supply and Demand Music Video Contest and the 2013 Economic Value is Subjective Video Contest have  been fantastic and have had more than 100,000 views on Youtube. See the winning entries below.

I am pleased to announce the 2014 Economics Music Video Contest on Markets Promote Peace. Winners get $2,500 and their professor gets $500. According to the great 19th century liberal, Richard Coben, markets help change a relationship between strangers from one of indifference, or even contempt, to one of mutual benefit. People who may not have cared about each other, now see the other party as an ally. Militarism, on the other hand, causes conflict. To Cobden an important, more humane, and more effective substitute for militarism in the international realm is the expansion of markets.

Continue reading about the contest here: http://hackleychair.wordpress.com/2-economics-music-video-contest/

Winners of  the 2013 Value is Subjective Music Video Contest

 

Winners of the 2012 Supply and Demand Music Video Contest

 

Gary Stanley Becker (1930-2014): Through My Austrian Window

May 5, 2014

by Mario Rizzo

It is tempting to over-romanticize a person when he or she is gone. I will strive to be balanced in keeping with how I feel and think about Gary Becker.

I am saddened by his recent death (May 3rd). I have known him since at least 1974 – some forty years. He was not on my dissertation committee but he took a strong interest in and liking to my dissertation on the effect of crime on property values. I audited his version of the first-year sequence in price theory at the University of Chicago. It was, in my view, the best of the three versions I was exposed to. He was a little scary insofar as he lectured and then suddenly would call on a student with a question. Since I was an auditor only, my name did not appear on the class list so I escaped the surprise questioning.

He loved economics and loved to apply it to a wide range of problems. He was no enemy of mathematical economics but thought that theory should be as simple as possible and developed with applications in mind. He was a true follower of Alfred Marshall on this: theory as the engine for the discovery of concrete truth. He was also no “positivist” in methodology. (Some people are quite careless about how they use that term.) He did not think that every statement in economic theory has to be falsifiable or testable. In response to what I believe to be the methodological disaster of behavioral economics, he argued that rationality per se is never testable. What is testable is the complex of assumptions and basic structure of a theory when it is applied to concrete problems. (I add, for those schooled in the philosophy of science, that he invoked the “Duhem-Quine Thesis.” )

He accepted Lionel Robbins’s view that economics is a science of choice generally, and not only a science of market exchange (what used to be called catallactics). In accepting that view he accepted the same perspective on this matter as Ludwig von Mises and the British economist Philip Wicksteed – from both of whom Robbins derived his own view. So there is immediately an undeniable Austrian connection.

Within the past couple of years or so, I wrote to Gary about how I thought his view on “irrational” preferences was similar to those of Philip Wicksteed who, in 1910, argued that irrationalities and inconsistencies of preference tend to be eliminated under the pressure of costs, when in fact those preferences detract from the agent’s attainment of his own goals. He agreed with me, with – in typically Beckerian fashion – the proviso that Wicksteed didn’t have adequate empirical evidence, but Becker did in some of his papers. Okay.

Some Austrians may think that Becker was an enemy of Austrian economics because in 1962 he and Israel Kirzner had a debate in the pages of the Journal of Political Economy. In the fullness of time, I believe that neither of them had a clear view of their own developing perspective in 1962. Nevertheless, Kirzner was emphasizing that some assumption about rationality (later “alertness”) was necessary if a market is to move from disequilibrium to equilibrium. Becker was arguing that you don’t need a rationality assumption to get a negatively sloped demand curve – scarcity is enough. Becker, I believe, was getting at a point later made by Vernon Smith that “rational” behavior can be provoked or engendered by the (institutional) constraints of the system under study. The interesting question is when is alertness the key and when are institutional constraints the key. What is the relative role of each?

I think to a certain extent contemporary economics has moved beyond (but probably not nearly enough) the equilibrium versus process divide. Most good theories borrow from each paradigm. Nevertheless, it is hard to argue that Becker’s relatively equilibrium-oriented approach has not provided useful insights about the real world.

Gary Becker will be missed not only for the breadth and depth of his ideas, but also because of his kindness and generosity to others.

Ave atque vale.

Congress Should Grow a Pair

June 17, 2013

by Roger Koppl

I was thinking of the NSA scandal while jogging through Rome’s Park of the Aqueducts  this morning. I guess it was that setting that made me think of our new computer-geek overlords as a virtual Praetorian Guard.  Augustus created the original Praetorian Guard about 27 BCE to protect the emperor. It quickly came to exercise independent power, once even auctioning off the empire to the highest bidder.  This outrage led the Roman general Septimius Severus to march on Rome and displace Emperor Julianus who had won the Praetorian bidding war. Severus disbanded the old Preatorian Guard only to set up a new Praetorian Guard, which quickly achieved a similar authority, power, and autonomy. The “intelligence community” of the US government seems to be playing a similar role today.

We now have secret interpretations of public laws  that some members of Congress have obliquely warned of. Read the rest of this entry »

F.A. Hayek: His 114th Birthday

May 8, 2013

by Mario RizzoHayek as Street Art

Today is Hayek’s birthday. Much has been and will continue to written about him. When I look around at much of what passes for economics today, especially in the prestige circles, I cringe.  But reading his work always comforts me that something better is possible. And, in fact, there are many economists all over the world who take their inspiration from Hayek and his work. This is their day too!

Hayek, of course, was more than economist. He also had profound things to say about the mind, the rule of law, and ethics. Recently, I saw a stark example of the difference in ethical thinking between Hayek and more conventional moralists. This was in the case of the tragic fire in a Bangladeshi factory making clothes for western companies. The new Pope Francis condemned it as an example of corporations only caring about their bottom-line.

Now there are legitimate issues, from the point of view of the individuals working in this and other such factories. Can they rely on the attestations of a certain degree of safety in their working environment? Before people can voluntary assume the risks associated with certain kinds of work they must have at least a pretty good idea of what those risks are.

And yet there is a more fundamental issue.  Workplace safety is a matter of degrees. It is a working condition that is part of the cost of labor. There is an inevitable tradeoff between wages and level of employment, on the one hand, and workplace safety on the other hand. In rich countries workers can afford to sacrifice something for greater workplace safety. This is all part of increasing wealth.

Now major corporations are re-thinking their use of factory labor in Bangladesh.  They don’t want the images of large numbers of dead ruining their reputations. Ostensibly, they will argue that since they cannot trust Bangladeshi authorities to keep the factories safe they will not deal with them. Voila, the moral stance. Read the rest of this entry »

The Euro: a Step Toward the Gold Standard?

April 22, 2013

by Andreas Hoffmann (University of Leipzig)

In a recent piece Jesus Huerta de Soto (2012) argues that the euro is a proxy for the gold standard. He draws several analogies between the euro and the classical gold standard (1880-1912). Like when “going on gold” European governments gave up monetary sovereignty by introducing the euro. Like the classical gold standard the common currency forces reforms upon countries that are in crisis because governments cannot manipulate the exchange rate and inflate away debt. Therefore, to limit state power and to encourage e.g. labor market reforms he views the euro as second best to the gold standard from a free market perspective. Therefore, we should defend it. He finds that it is a step toward the re-establishment of the classical gold standard.

There has been much criticism of the piece that mainly addresses the inflationary bias of the ECB. I actually agree with much of it. In particular, imperfect currency areas have the potential to restrict monetary nationalism. This can be welcomed just as customs unions that allow for free trade (at least in restricted areas). But I have some trouble with De Soto’s conclusions and the view that adhering to the euro (as did adhering to gold) gives an extra impetus for market reform – in spite of the mentioned e.g. labor market reforms in Spain. Read the rest of this entry »

Income Inequality Matters

March 26, 2013

by Roger Koppl

Income inequality matters. Let me say that again so you know I meant it: Income inequality matters. This statement may be surprising coming from a self-described “Austrian” economist and a “liberal” in the good old-fashioned pro-market sense. It shouldn’t be. It should be one of our issues. The surprise should be that we pro-market types have not spoken up more on this central issue, thereby letting it become associated almost exclusively with more or less “progressive” opinion.

This indifference to income distribution is all the more mysterious because pro-market thinkers generally support a theory of politics that tells us to watch out for ways the state can be used to create unjust privileges for some at the expense of others. We should expect the distribution of income to be skewed toward the politically powerful and away from the poor and politically weak. In a representative democracy “special interests” engage in “rent seeking” to get special favors. Those special favors enrich some at the expense of others. That’s what they are meant to do! Read the rest of this entry »

Economics of the Undead

March 11, 2013

This is a project I’ve been working on, and I hope that some of ThinkMarkets’ readers (and bloggers) will consider contributing.

Call for Abstracts

Economics of the Undead:  Blood, Brains & Benjamins

Glen Whitman & James P. Dow, Editors

The editors seek abstracts for essays exploring the relationship between economics and the undead, especially zombies and vampires.  The chosen essays will appear in a collection to be published by Rowman & Littlefield.

Ideal contributions will use economic reasoning to address issues related to the undead, use the undead as a means of exploring economic thought, or both.  Abstracts and final essays should be written in an accessible and engaging style for a popular audience.  Contributions should also make relevant reference to the undead in pop culture, such as the Twilight saga, Buffy the Vampire Slayer, the novels of Anne Rice, World War Z, the films of George Romero, True Blood, and The Walking Dead.

Possible topics include:  supply and demand in the market for blood; the operation of zombie labor markets; the political economy of responding to undead threats; macroeconomic recovery after a zombie apocalypse; what zombie and vampire behavior tell us about rational-choice modeling; etc.

Submission Guidelines:

1.      Send abstract of paper (100-500 words) in Word or compatible format.

2.      Include resumé/CV for each author.

3.      Submit by email to both glen.whitman@gmail.com and jpdow@verizon.net.

4.      Submission deadline is 7 April 2013.

5.      For accepted abstracts, first drafts of essays will be due 15 July 2013.

Feel free to forward this to anyone with economics training or experience who might be interested in contributing.  Although we are only asking for abstracts at this time, if you have already written an unpublished article that fits the subject matter, you may submit the article in its entirely.

Interests are More Powerful than Ideas?

December 9, 2012
THE BIG STORY OF SPENDING

THE BIG STORY OF SPENDING

by Mario Rizzo

There is an interesting interview with Ed Feulner, the outgoing president of the Heritage Foundation, in the weekend (Dec. 8-9) Wall Street Journal. The interview got me thinking about the progress made in the pro-economic-liberty cause, not only over the years of Heritage, but since, say, 1960. Read the rest of this entry »

A “Kleinian” Version of Austrian Business Cycle Theory

September 10, 2012

by Gene Callahan

The next phase in my (now our, as I’ve taken on a colleague) project of thinking through Dan Klein’s Knowledge and Coordination is to see how his ideas might be used to help describe business cycle theories and demonstrate commonalities they share. Note: the point of the present exercise is simply to try to describe an existing business cycle theory in Kleinian terms, not to improve upon it or argue for its accuracy.

We will begin with the Austrian Theory of the Business Cycle: Read the rest of this entry »

The Great Ideas of the Social Sciences

August 31, 2012

by Gene Callahan

Let’s take social science broadly, in the sense of German wissenschaft, so that The Republic and Politics and The Social Contract are social science. (I would contend that they are, in fact, often much more scientific than the latest regression study of how detergent use correlates with the suicide rate.)

So what, then, are the most important ideas ever put forward in social science? I’m not asking what are the best ideas, so the truth of them is only obliquely relevant: a very important idea may be largely false. (I think it still must contain some germ of truth, or it would have no plausibility.) Think of it this way: if you were teaching a course called “The Great Ideas of the Social Sciences,” what would you want to make sure you included?

Here’s my preliminary list. What have I left off? What have I mistakenly included? Read the rest of this entry »

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